1. A Booming Economy: The 1920’s Income increases People purchase more goods Companies earn higher profits Companies expand and hire more people “Boom Cycle”

2. · Henry Ford used assembly lines to produce cars.Henry Ford Impact of the Car Industry

3. Ex.) Model-T 1909 - $850 1916 - $360 1924 - $290Model-T · The efficiency of the assembly line helped to decrease car prices.

4. The following industries grew as a result of the booming car industry: construction (roads and bridges) steel rubber glass paint oil housing (as the suburbs grew)

5. · In the 1920’s, people began to purchase items they couldn’t afford through the use of installment buying, or buying on credit.installment buying New Goods for Sale · Installment buying increased the demand for goods, while consumer debt increased.

6. · Millions of Americans invested in the bull market, becoming rich as stock prices rose. bull market Stocks Surge

7. Buying Stocks on Margin: Scenario A investor stock broker Hello, sir. I would like to purchase 100 shares of stock in the Ford Motor Company. How much is it going to cost me?

8. Buying Stocks on Margin: Scenario A investor stock broker Well, Ford stock costs $10 per share. You want to buy 100 shares? Figure it out yourself, smartguy!

9. Buying Stocks on Margin: Scenario A investor stock broker Ummm… 100 shares x $10 per share = $1,000.00 Oh, well. I only have $100. I can’t afford 100 shares.

10. Buying Stocks on Margin: Scenario A investor stock broker No, problem! Just give me $100 and you can owe me the rest!

11. Buying Stocks on Margin: Scenario A investor stock broker Like, how much would that be? Let me think… $1,000 worth of stock - $100 paid = $900 owed Alright, it’s a deal!!

12. Buying Stocks on Margin: Scenario A investor stock broker Six months later, Ford stock doubles to $20 per share. My 100 shares are now worth... 100 shares x $20 per share $2,000

13. Buying Stocks on Margin: Scenario A investor stock broker That’s great! Now pay me the $900 you owe me!

14. Buying Stocks on Margin: Scenario A investor stock broker No problemo! It was a pleasure doing business with you!

15. Buying Stocks on Margin: Scenario A investor Now let’s figure out how much money I made! $2,000 net worth - $900 owed $1,100 profit - $100 initial investment $1,000 net profit

16. Buying Stocks on Margin: Scenario B investor stock broker Six months later, Ford stock decreases to $1 per share. My 100 shares are now worth... 100 shares x $1 per share $100

17. Buying Stocks on Margin: Scenario A investor stock broker Too bad, hotshot! You still owe me $900!

18. Buying Stocks on Margin: Scenario A investor stock broker But I’m broke! What am I going to do!

19. Buying Stocks on Margin: Scenario A investor stock broker I don’t care what you do as long as you pay me back!

20. * Unquestioned faith in the bull market helped lead to the Great Depression!Great Depression · Some people began to buy stocks on margin, which is similar to installment buying.

21. The Law of Supply and Demand Honus Wagner baseball card (1909 ) Demand Only 50 – 60 Honus Wagner baseball cards exist in the world. + + Supply = = Price The card is valuable because of its scarcity. In 2007, a mint copy was sold for $2.35 million. sold

22. The Law of Supply and Demand Hannah Montana stickers Demand Available almost everywhere. + + Supply = = Price Even though there is a large demand, there is a lack of scarcity. Sells for $1.50.

23. The Law of Supply and Demand A small pile of dirt. Demand Available almost everywhere. + + Supply = = Price No scarcity and no demand. Therefore, this pile of dirt is virtually worthless.

24. The Law of Supply and Demand GI Joe Action Figure (1964 ) Demand In “good” condition. + + Supply = = Price A 1964 GI Joe in good condition is relatively scarce. This one is for sale on Ebay for $350.00

25. The Other Half: Farmers Europeans needed food. They bought U.S. farm products. U.S. farm prices increased. U.S. farmers borrowed money to buy more land and supplies. During World War I:

26. The Other Half: Farmers Europeans began to produce their own food again. The demand for U.S. farm products decreased. U.S. farm prices decreased. Farmers could not repay their debts. After World War I:

28. Prohibition lasted from 1920 to 1933 when it was repealed by the 21 st Amendment

29.  Reformers had long believed alcohol led to crime, child & wife abuse, and accidents  Supporters were largely from the rural south and west

30. Speakeasies

31.  Prohibition contributed to the growth of organized crime in every major city  Al Capone –  Chicago, Illinois  famous bootlegger  “Scarface”  $60 million yr (bootleg alone)  Capone took control of the Chicago liquor business by killing off his competition  Talent for avoiding jail  1931 sent to prision for tax-evasion. Al Capone was finally convicted on tax evasion charges in 1931

34. Federal agents pour wine down a sewer